Union Government v Vianini Ferro-Concrete Pipes Ltd

• Jurisdiction: South Africa
• Judge: Stratford CJ, De Villiers JA, De Wet JA, Watermeyer JA and Tindall JA
• Judgment Date: 23 September 1938
• Citation: 1938 AD 560
• Hearing Date: 13 September 1938
• Court: Appellate Division

Stratford, C.J.:

The respondent company (plaintiffs in the court below) sued the Government for the sum of £28 8s. being the purchase price of certain concrete pipes which it alleged the Government was obliged to purchase from the company but had purchased elsewhere and for a determination by virtue of sec. 102 of Act 46 of 1935 of its existing, future or contingent rights under a contract dated 9th February, 1937, between the Government and the company.

The declaration set out that the Government through the chairman of the Union Tender and Supplies Board had invited tenders for the supply inter alia of concrete pipes, the types and quantities of which were indicated in a specification of the estimated requirements of the various Government establishments. The tenders were required to be upon certain proposed conditions of contract annexed to the tender form. The respondent company duly submitted a tender which was accepted by the Government. Thereupon on the 9th February, 1937 the company entered into a contract with the Government, the operative clauses of which were as follows: -

"1. The contractor shall supply to the Government during the period commencing 1st January, 1937, goods of the description and at the respective prices or rates mentioned in the Schedule hereunto annexed and enclosures marked 'A', 'B ', 'C', 'D', and 'E', and in conformity with the attached conditions of contract with which the contractor acknowledges himself to be acquainted.

"2. If at any time or times hereafter any part of the said goods contracted to be supplied shall not be so delivered in conformity with the provisions and conditions of this contract then in each and every or any such case it shall be lawful for the Government from time to time forthwith to purchase goods of the same description and quantity as and in lieu of the goods neglected to be supplied or not supplied in conformity with this contract. Further, if the contractor commit any breach of any of the terms or conditions of this contract or fail to observe and perform, the same, it shall be lawful for the Government at any time afterwards during the existence of this contract to rescind the same by giving seven days notice in writing to the contractor informing him of such the Government's intention and on the

Stratford, C.J.

expiration of such notice the Government may rescind this contract without further notice to the contractor, and may enter into any other contract or contracts with any other person or persons whomsoever for the supply of the same description and quantities of goods as may be required to complete the remainder of the contract. Further it shall be lawful for the Government to recover from the contractor, as liquidated damages, any excess of price over and above the contract prices herein mentioned, and any cost, charges and expenses which the Government may have paid or become liable to pay in consequence of any such purchases or of having entered into any such new contract or contracts as aforesaid or otherwise through the default of the contractor. Further, after the making of any such purchase or entering into any such new contract it shall be lawful for the Government to hold and retain any money which shall be due to the defaulting contractor on account of this or any other contract, as security for any loss or deficiency or any excess of price as aforesaid which the Government may sustain or be put to by reason or in consequence of the non-performance and nonfulfilment of these presents and to apply the same so far as the same will extend in satisfaction of each loss, deficiency, or excess when the amount thereof is ascertained.

"3. In consideration of the...